Oaktree Capital Management has taken a major stake in Eagle Bulk Shipping by converting bonds into shares seven months after its exit left the door open to the bulker owner’s takeover by Star Bulk Carriers.
A securities filing by Star Bulk said that Oaktree elected to turn a portion of its convertible notes into nearly 1.1m shares.
A joint securities filing by Oaktree, together with Brookfield Corp and BAM Partners Trust, shows that the shares have given the firms a 9.96% stake with 1.1m shares.
This makes the grouping the third-largest investor in the New York-listed owner, with a slice worth $57m.
The conversion means Star Bulk will issue another 2.88m shares under the deal to take over Eagle Bulk.
The latest change in Eagle’s shareholder rolls comes after a sell-down by New York investor BlackRock earlier this week.
The institutional investment giant cut its stake in Eagle Bulk to 7.7% by offloading $11m of stock, weeks after building a position of nearly 10%.
Eagle Bulk closed at $57.39 per share in New York on Thursday, down 0.16%.
Oaktree sold its 27.6% stake last June when the price was around $48.37, amid an exodus of funds from shipping that Scorpio Group president Robert Bugbee dubbed “prexit”.
TradeWinds had reported that a pair of Greek owners were investigating buying Oaktree’s shares, potentially leaving the outfit vulnerable to a takeover.
But Eagle Bulk itself pre-emptively bought the entire Oaktree stake for $219m.
Around the same time, Greece’s Danaos Corp disclosed a 16.7% stake in Eagle Bulk, while Cyprus-based shipowner Castor Maritime revealed a 14.9% holding.
Instability created
It was the instability created by Oaktree’s desire to exit after backing Eagle Bulk for a decade that set the dominoes in motion for Star Bulk’s eventual $500m takeover of the company.
Oaktree also sold 10m shares in Star Bulk to the company itself in a $185m deal last year.
Eagle Bulk’s purchase of its own stock sparked controversy over the price paid and whether Oaktree received preferential treatment compared with other investors.
In the case of Petros Pappas-led Star Bulk, Oaktree will for now remain its largest investor.
The sale reduced its holding to 17.2% from 25.2%.
Howard Marks-led Oaktree has been a long-term backer of both dry bulk owners.
The investor is characterised as one of the most patient private equity investors in shipping.
This story has been amended since publication to reflect that Oaktree obtained its Eagle stake by converting notes, rather than buying shares.
